Tony added that this is the third consecutive year where the Ringgit has become the worst performing currency in Asia:

Before I comment on the issue of "confidence crisis" raised by Tony, allow me to fact-check Tony with regard to his claim that this is the third consecutive year where Ringgit has become the worst performing Asian currency.

Basically Tony said that Ringgit has been the worst perfoming currency in Asia in 2014, 2015 and 2016.

In 2014, Ringgit was not the worst performing currency in Asia, instead it was Japanese Yen.

USDMYR (Blue) vs USDJPY (Purple)

Ringgit depreciated about 6.1% in 2014 against US Dollar, while Yen depreciated more than 13% against US Dollar.

Ringgit depreciated 18.6% against US Dollar making it the worst performing currency in Asia.

But it's also not a cause for alarm because almost all oil-exporting nation currencies depreciated sharply against US Dollar save for Gulf Cooperation Council (GCC) [3] like Saudi, UAE, Qatar who pegged their currencies to US Dollar and Brunei who had a monetary union [4] with Singapore.

Of course Tony overlooked the fact that Ringgit was Asia's best performing currency earlier this year because it's opposition's habit to highlight only the negative things that are happening in our country.

By June this year, Ringgit started to depreciate again and last month Ringgit erased all gains it recorded in the first half of 2016.

This is because of uncertainties arose after Donald Trump stunned the world by beating Hillary Clinton in the US Presidential election to become the next US President.

Apart from the fact that Trump's campaign was based on racism, sexism and the politics of fear, he also promised to spend [6] heavily on US infrastructure via a fiscal stimulus package worth 1 trillion US Dollar.The financial markets reacted to the planned stimulus differently across the board.

The stock market particularly financial and industrial stocks rose sharply after Trump's victory while the US government bonds (treasury) took a huge hit as investors reacted to the planned $1 trillion fiscal stimulus. (*When prices of bond fall, the bond yields rise):The 10-year US treasury yield rose (price dropped) the most in three years as bond investors think that President Trump's infrastructure stimulus will stoke inflation in the US.Trump has also promised to the Americans that he will pull out from any current and already-planned trade deals or agreements between US and other bloc of countries like the NAFTA, TPP and TTIP because he thought that those trade deals have not benefited and will not benefit the Americans.He's also accused China of practising currency manipulation by competitively devaluing its currency (Chinese Yuan) to make its exports cheaper and gain a competitive advantage over other countries at the expense of the US exports industry.He planned to impose a huge import tariffs (duty) on products from China that will make them become more expensive and less competitive.These protectionism policies are expected to boost US inflation rates faster and will give room for US central bank, the Federal Reserve to raise the interest rate.Since the global financial crisis in 2008, Fed has only hiked the interest rate once in December 2015 by 25bps (+0.25%) because of the persistently low inflation and slack in the job market.Trump's expansionary fiscal stance and protectionist stance on trade stoke the selloffs in US Treasury as investors expected faster inflation rates that will lead to the Federal Reserve to hike US interest rate in the near future.That brings us to the selloffs in other currencies across the globe including our own Ringgit.

Other than oil and Fed, Ringgit was also affected by the devaluation of China's currency Yuan by its central bank, People's Bank of China (PBOC).

Ringgit which has already pressured by the plunging crude oil prices, experienced a sell-off as investors fled to safe haven assets such as US Treasury, US Dollar and gold.

Two months after the beginning of stock market turbulence in China and around the world, People's Bank of China (PBOC) decided to devaluate/weaken Yuan as much as 2% against the US Dollar; the largest devaluation since two decades ago. [7]

These are all among the biggest factors that made Ringgit depreciated against the Dollar over the past three years not just because of plunging crude oil prices and certainly not because of 1MDB as Tony alleged.

Was Ringgit not affected by 1MDB at all?

It was but not as much as affected as it was by Fed's monetary policy, Yuan's devaluation and dropping crude oil prices.

If there is a confidence crisis among investors especially foreign investors, we'd see a huge jump in capital outflow due to divestment by foreign investors here.

We shouldn't gauge the portfolio investment flows because portfolio investments are short term investments made in stock and bond markets in which the investors (actually traders) buy and sell securities to make quick gains.

Instead we should observe the direct investment flows which made up of long term direct investments and involved buying more than 10% equity in local companies, setting up factories, creating jobs and such.

"Credit" refers to inflow of funds or amounts received by direct investment enterprise in Malaysia from foreign direct investor and affiliate in the form of equity capital, reinvested earnings, loan transactions, trade credits as well as other capital receipts while "Debit" refers to outflow of funds or amounts paid to foreign direct investor and affiliate from direct investment enterprise in Malaysia due to liquidation of investment, loan transactions, trade credits and other capital payments.

Even when in crisis of confidence as alleged by Tony, Malaysia still recorded higher FDI receipts (credit) year-on-year in 2014 (RM112 billion) and 2015 (RM128 billion) and on track to record another higher FDI inflow this year (*note that 2016 figures above are for January to September only).

Even though FDI outflows increased too, on net basis (credit minus debit), it recorded higher net FDI inflows in the years where Tony said Ringgit was the worst performer in Asia.

The second finance minister was right to say that there's no cause for panic regarding Ringgit depreciation.

Some things like Federal Reserve monetary policy, weaknesses in China's economy, People's Bank of China actions are beyond government of Malaysia's control.

When the fear over Trump's policy expectation dissipates and when investors get more clarity from global economic and financial markets outlook, we'd see Ringgit rebounds from its current levels as we have seen many times before.

Politicians like Tony Pua should stop spreading fears among the Malaysians for the sake of scoring some political points if they have nothing to contribute.